I have now read draft-jseng-idn-admin-02, and I don't see how it can accomodate the non-transitive variant situation I described, especially if first-come-first-serve is the conflict policy.
Let's walk through it. Recall that X and Y are variants, and Y and Z are variants, but X and Z are not variants.
Someone registers X, causing the creation of package1 containing X (in the zone) and Y (reserved).
Someone else registers Z, causing the creation of package2, containing Z (in the zone). Package2 would like to contain Y (reserved), but this conflicts with package1, so the FCFS conflict policy is invoked, which leaves Y in package1, and allows package2 to be created without Y.
Now the first person deletes package1. Section 3.3 is very explicit about what happens:
When an IDL Package is deleted, all the active and reserved variants would be available again. IDL Package deletion does not change any other IDL Packages, including IDL Packages that have variants that conflict with the variants in the deleted IDL Package.
So now package2 is unaffected, and Y is available. Now a third person can come along and register Y. Now Y and Z are registered to different people. But a primary purpose of the whole system is to prevent two variants from being registered to different people, right?